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Foreclosures is a situation in which a homeowner is unable to make full principal and interest payments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as agreed in the mortgage deal. One month after the homeowner misses a mortgage loan payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner misses a mortgage payment, presuming the mortgage is still delinquent, and the house owner has not made up the missed payments within a specific grace period, the financial institution will commence to foreclose. The farther behind the debtor falls, the more difficult it becomes to get up since lenders add fees for payments that are 10-15 days late.

Each state has its own foreclosure laws covering the notices the lender must post publicly and/or with the homeowner, the homeowner's selections for bringing the loan current and avoiding foreclosures, and the process for selling the property. In twenty-two states – including California, Illinois, and Ny – judicial foreclosure is the norm, meaning the lender must go through the courts to get authorization to foreclose by showing the borrower is overdue.

If the foreclosure is approved, the local sheriff online auctions the house to the highest bidder to try and recoup what the bank is due, or the bank becomes the owner and sells the property through the traditional route to recoup their loss. The entire contencioso foreclosure process, from the borrower's first, missed repayment through the lender's sale for the home, usually will take 480 to 700 days and nights, based on the Mortgage Bankers Relationship of America.

The other 28 states – including Arizona, California, Georgia and Texas – mainly use non-judicial foreclosure, also referred to as the power of sale, which tends to be faster and really does not go through the courts unless the homeowner sues the lender.

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